Successful Scaling is No Mystery – It’s About Business Fundamentals

Scale-up concept with growing plants

I was recently on the panel at the annual Research Money Conference, which focused on the Federal Government’s Innovation Agenda and their goal of supporting growing companies, specifically as they scale.

“Scaling-up” has definitely become a buzzword and focus for Canadian companies. The problem is there’s little clarity and consistency on exactly what this means and how to best support companies trying to scale.

Scaling is not just for young startups

Scaling is tough – it’s much more than just providing funding to help companies grow.

For companies to scale, there needs to be accelerated revenue growth with minimally increasing costs. There tends to be a focus on supporting “winners” – often the young and innovative companies. But as we have seen at the Business Sherpa Group, scaling opportunities can also be available for mature businesses. Whether they are high-tech, low-tech or no tech, they all need to be supported.

A company that is looking to scale should focus on strengthening their foundations. Jason Albanese, co-founder and CEO of Centric Digital shared with Inc. that scaling was about pairing exponential revenue growth with incrementally increasing costs. This growth is achieved when the company can deliver a product or service systematically and consistently, which ensures a universal experience for the customer.

Our clients that have successfully scaled (both start-ups and mature businesses) have consistently innovated how they operate, in some cases completely re-inventing their organization.

Some scale-up strategies include:

  • Create new organizational structures that incorporate critical functions needed to scale.
  • Take a hard look at your current team to identify serious gaps (skills and functions).
  • Develop a talent strategy that creates a roadmap from current state to future state, providing an opportunity to groom internal talent, or scout and hire for new critical roles.
  • Focus on cultivating systematic and consistent processes that will ensure your business can support and deliver services to customers at scale.

Planning is key

Marshall Goldsmith, who authored What Got You Here Won’t Get You There, understands that the team you started with and a mashed-up organization (typical at early stages) will rarely work if you want to achieve 10x revenue growth.

Timely and innovative planning around talent, organization structure and business processes will ensure these critical foundations are in place and aligned with your business goals for scaling. This way companies can avoid the trap of simply adding resources and costs at the same rate as revenue growth (which is incremental growth, but isn’t scaling).

Smoothing the transition

Jim Deters, CEO of Galvanize wrote in Entrepreneur that going from startup to scale-up is like moving from toddler-level soccer to competitive. At the competitive level the CEO must get off the field and start coaching. The team must evolve from the “hustler” mentality of everyone energetically chasing the ball, to a more sophisticated game of organized roles.

Here are Jim’s suggestions for easing the transition:

  • Start functionalizing roles – employees must narrow their focus; some may be left behind, but you will also unleash the super-talent you have in your team to now focus on what they are great at.
  • Find amazing managers and leaders who will care about process, business metrics and building and empowering teams.
  • Onboard well – prepare the way for success. This is a process, not a one-day event.
  • Take care of your team on and off the field, both professionally and personally. This allows individuals to contribute to their fullest potential.

While “scaling-up” seems to be the new focus of funding, government programs and incubating strategies, the reality is that successful scaling is all about getting fundamentals in place. Putting fundamentals in place allows the business to achieve the necessary efficiencies and processes to support the scaled growth.

In the end it’s all about people, processes and technologies.

About the Author

Margo Crawford is the President, CEO and founder of the Business Sherpa Group where she has been involved with over 50 companies throughout North America from formation stage through to sale. Margo is a recognized thought leader in the area of human resources and entrepreneurship, and is passionate about the long term success of small and mid sized enterprises.

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